Swiss National Bank Cuts Interest Rate to Zero Amid Surging Franc Inflows and Weak Inflation Outlook

Economic

Summary:

In a bid to counter persistent currency strength and sliding inflation, the Swiss National Bank (SNB) cut its policy rate to zero—the lowest benchmark among major central banks...

Strategic Policy Easing to Deflect Capital Inflows

On June 19, the Swiss National Bank implemented a quarter-point rate cut, bringing its key policy rate to 0%. This move, the sixth consecutive easing step, aims to arrest upward pressure on the Swiss franc, which has seen persistent inflows amid geopolitical instability and the disruptive effects of U.S. trade policy under President Donald Trump. The strength of the franc recently pushed consumer prices into negative territory for the first time since 2021, compelling policymakers to abandon previous plans to pause the easing cycle.

President Martin Schlegel emphasized that the rate reduction is a direct response to weakening inflation momentum and that further action remains on the table. The SNB reiterated its readiness to intervene in the foreign exchange market if necessary. However, such interventions carry reputational risk, particularly with the U.S. Treasury adding Switzerland to its watchlist for currency practices earlier this month.

Franc Strength and the Challenge of ZIRP

The Swiss franc has appreciated nearly 2% against a basket of currencies this year and briefly hit a decade-high against the U.S. dollar last quarter. Despite the easing, the franc edged higher against the euro post-announcement, suggesting some investors anticipated a deeper cut of 50 basis points.

The shift to zero interest rates places the SNB in a unique position globally. While the U.S. Federal Reserve and the European Central Bank are holding steady, and others like the Bank of England remain cautious, Switzerland’s pivot toward zero interest rate policy (ZIRP) reflects the disproportionate impact of currency appreciation on its export-driven economy.

Potential Return to Negative Territory

This cut ends more than two and a half years of positive rates and sets a new post-crisis benchmark low. Should pressures persist, the SNB has signaled openness to re-enter negative rate territory—last used from 2014 to 2022. Schlegel acknowledged the drawbacks of such a policy, particularly its compression of bank margins and the penalty it imposes on excess reserves.

Currently, banks earn the policy rate on reserves up to a defined threshold; deposits beyond that level now incur negative interest, as they are remunerated at 25 basis points below the zero-rate policy.

According to economists at ODDO BHF, another 25 basis point cut is likely in September. The objective would be to further temper franc appreciation while supporting domestic credit conditions. Analysts believe the SNB may reintroduce partial exemptions to cushion domestic banks from the full brunt of negative rates.

Inflation Forecast Downgrade Reflects Persistent Price Weakness

The SNB sharply lowered its inflation projections: 0.2% for 2025, 0.5% for 2026, and 0.7% for 2027—down from prior estimates of 0.4%, 0.8%, and 0.8%. These revisions reflect broad-based deflationary forces, including sluggish global demand and elevated franc strength reducing imported cost pressures.

Nonetheless, the SNB maintained its GDP growth forecast at 1%–1.5% for 2025, supported by strong Q1 exports and front-loaded external demand. This stability contrasts with market expectations of a downward revision due to protectionist U.S. tariffs and weakening European activity. The Swiss government also reaffirmed its 1.3% growth forecast earlier this week.

Mixed Market Reactions and Financial Sector Strain

Swiss equity markets fell as much as 1.1% following the rate decision, reflecting investor concern about bank profitability. While exporters benefit from currency weakening and lower rates, banks face compressed lending margins and reduced deposit returns under ZIRP, leading to broader pressure on financial sector stocks, which represent a substantial portion of Switzerland’s market benchmark.

The SNB’s move to zero rates marks a decisive response to mounting currency and price pressures. With inflation near zero and capital inflows persisting, policymakers have limited tools left before re-engaging in controversial negative interest territory. The SNB’s balancing act—between currency competitiveness, inflation control, and financial sector stability—will continue under close scrutiny in the months ahead. As global central banks pause, Switzerland’s early pivot may serve as a litmus test for smaller economies grappling with strong currencies in a fragmented monetary world.

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Gerik

Economic

Cryptocurrency

Regulatory Clarity Spurs Market Surge

On June 18, shares of stablecoin issuer Circle surged by 33.8% following the U.S. Senate’s passage of the GENIUS Act—a pivotal bill establishing a legal framework for stablecoins. Cryptocurrency exchange Coinbase also saw a sharp 16% rise, while trading platform Robinhood gained 4.5%. The rally reflects heightened investor optimism surrounding the bill’s potential to resolve longstanding regulatory ambiguity that has hindered crypto innovation in the United States.

The GENIUS Act, which received rare bipartisan support in the Senate, is now heading to the House of Representatives and then to President Donald Trump for final approval. If enacted, it would be the first comprehensive legislation to govern stablecoin issuance and reserve practices in the U.S., effectively laying the groundwork for broader institutional adoption.

Stablecoins Positioned for Mainstream Utility

Stablecoins are digital assets pegged to stable-value references such as fiat currencies or gold. Their design mitigates price volatility typical of other cryptocurrencies, making them more suitable for daily transactions and long-term investments. Under the GENIUS Act, all stablecoins issued in the U.S. must be backed by high-liquidity assets, including U.S. dollars and short-term Treasury securities. Issuers will also be required to disclose their reserve compositions monthly, increasing transparency and investor protection.

This regulatory clarity is expected to be a catalyst for global acceptance. By offering a consistent legal structure, the bill addresses institutional hesitations and enables stablecoins to evolve from niche instruments to central pillars of digital finance.

Wider Industry Implications and Global Interest

The bill’s passage has already begun to reshape strategic plans across financial and commercial sectors. Major U.S. banks such as Bank of America and Morgan Stanley are reportedly exploring crypto initiatives in anticipation of the new rules. Similarly, European giants like Societe Generale and Banco Santander are evaluating their entry points into the stablecoin space.

Retail corporations are also showing growing interest. Walmart and Amazon have reportedly conducted internal assessments on launching their own stablecoins. Meanwhile, PayPal has led the charge by releasing its own U.S. dollar-backed stablecoin in 2023. Most notably, World Liberty Financial—founded by President Trump—launched a stablecoin with a reported market capitalization of $2.2 billion.

Strategic Implications for the U.S. and Global Finance

Jeremy Allaire, CEO of Circle, described the bill’s advancement as a historic milestone that could define U.S. competitiveness in digital finance for decades. The GENIUS Act does not merely legitimize stablecoins—it repositions the U.S. as a regulatory leader in the global crypto race. The proposed oversight could bring confidence to both institutional investors and everyday users, enhancing stablecoins’ role in payments, remittances, and decentralized finance (DeFi).

By anchoring stablecoin reserves in risk-averse instruments and requiring ongoing transparency, the legislation addresses many of the structural criticisms previously leveled at the crypto sector, including concerns about systemic risk and opaque asset backing.

The U.S. Senate’s approval of the GENIUS Act signals a decisive moment for the cryptocurrency ecosystem, particularly for stablecoins. Beyond sparking a wave of market enthusiasm, it lays the legal foundation for mainstream integration and cross-industry participation. As the bill advances to the House and potentially to presidential ratification, the financial world is watching closely—viewing this legislative push as the beginning of a new chapter in digital currency regulation and adoption.

Source: Reuters

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Michelle

Political

Israel struck a key Iranian nuclear site on Thursday and Iranian missiles hit an Israeli hospital, as President Donald Trump kept the world guessing about whether the U.S. would join Israel in air strikes seeking to destroy Tehran's nuclear facilities.

A week of Israeli air and missile strikes against its major rival has wiped out the top echelon of Iran's military command, damaged its nuclear capabilities and killed hundreds of people, while Iranian retaliatory strikes have killed at least two dozen civilians in Israel.

The Israeli military said it targeted the Khondab nuclear reactor in Iran's Arak overnight, including its partially-built heavy-water research reactor. Heavy-water reactors pose a nuclear proliferation risk because they can easily produce plutonium, which, like enriched uranium, can be used to make the core of an atom bomb.

Iranian media reported two projectiles hitting an area near the facility, which had been evacuated and there were no reports of radiation threats.

Israel's military said it also struck a site in the area of Natanz, which it said contains components and specialised equipment used to advance nuclear weapons development.

On Thursday morning, several Iranian missiles struck populated areas in Israel, including a hospital in the southern part of the country, according to an Israeli military official.

Trails of missiles and interception efforts were visible in the skies over Tel Aviv, with explosions heard as incoming projectiles were intercepted. Israeli media also reported direct hits in central Israel.

Emergency services said five people had been seriously injured in the attacks and dozens of others hurt in three separate locations. People were still trapped in a building in a south Tel Aviv neighbourhood, they added.

Around a dozen mostly European and African embassies and diplomatic missions are located just a few hundred metres from the strike on Tel Aviv.

Images showed buildings extensively damaged in Ramat Gan near Tel Aviv and emergency workers helping residents, including children. Soroka Medical Center in Beersheba, in southern Israel, reported it had sustained damage.

Iran's Revolutionary Guard said it was targeting Israeli military and intelligence headquarters near the hospital.

The worst-ever conflict between the two regional powers has raised fears that it will draw in world powers and further destabilize the Middle East.

Speaking to reporters outside the White House on Wednesday, Trump declined to say if he had made any decision on whether to join Israel's air campaign. "I may do it. I may not do it. I mean, nobody knows what I'm going to do," he said.

Trump in later remarks said Iranian officials wanted to come to Washington for a meeting. "We may do that," he said, adding "it's a little late" for such talks.

Iranian Supreme Leader Ayatollah Ali Khamenei rebuked Trump's earlier call for Iran to surrender in a recorded speech played on television, his first appearance since Friday.

"Any U.S. military intervention will undoubtedly be accompanied by irreparable damage," he said. "The Iranian nation will not surrender."

Iran denies it is seeking nuclear weapons and says its program is for peaceful purposes only. The International Atomic Energy Agency said last week Tehran was in breach of its non-proliferation obligations for the first time in 20 years.

The foreign ministers of Germany, France and Britain plan to hold nuclear talks with their Iranian counterpart on Friday in Geneva to urge Iran to return to the negotiating table, a German diplomatic source told Reuters.

Israel, which is not a party to the international Non-Proliferation Treaty, is the only country in the Middle East believed to have nuclear weapons. Israel does not deny or confirm that.

CALLS FOR DIPLOMACY

Trump has veered from proposing a swift diplomatic end to the war to suggesting the United States might join it.

A source familiar with internal discussions said Trump and his team were considering options that included joining Israel in strikes against Iranian nuclear installations.

But the prospect of a U.S. strike against Iran has exposed divisions in the coalition of supporters that brought Trump to power, with some of his base urging him not to get the country involved in a new Middle East war.

Senior U.S. Senate Democrats urged Trump to prioritise diplomacy and seek a binding agreement to prevent Iran from attaining nuclear weapons, while expressing concern about his administration's approach.

"We are alarmed by the Trump administration's failure to provide answers to fundamental questions. By law, the president must consult Congress and seek authorization if he is considering taking the country to war," they said in a statement.

"He owes Congress and the American people a strategy for U.S. engagement in the region."

In social media posts on Tuesday, Trump mused about killing Khamenei.

Russian President Vladimir Putin, asked what his reaction would be if Israel did kill Iran's Supreme Leader with the assistance of the United States, said on Thursday: "I do not even want to discuss this possibility. I do not want to."

Putin said all sides should look for ways to end hostilities in a way that ensured both Iran's right to peaceful nuclear power and Israel's right to the unconditional security of the Jewish state.

Since Friday, Iran has fired around 400 missiles at Israel, some 40 of which have pierced air defences, killing 24 people, all of them civilians, according to Israeli authorities.

The Iranian missile salvoes mark the first time in decades of shadow war and proxy conflict that a significant number of projectiles fired from Iran have penetrated defences, killing Israelis in their homes.

Iran has reported at least 224 deaths in Israeli attacks, mostly civilians, but has not updated that toll for days.

U.S.-based Iranian activist news agency HRANA said 639 people had been killed in the Israeli attacks and 1,329 injured as of June 18. Reuters could not independently verify the report.

Source: Reuters

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Glendon

Forex

Economic

The Swiss National Bank on Thursday cut interest rates by a further 25 basis points to 0% — adding to concerns over a potential return to negative rates.

The reduction was widely expected by markets ahead of the decision, after traders priced in an around 81% chance of a quarter-point cut and around a 19% chance of a bigger 50-basis-point cut.

While other nations continue to battle inflation, Switzerland faces deflation, with consumer prices falling by an annual 0.1% in May.

Low levels of inflation are not unusual for Switzerland — the country has seen several periods of deflation in the 2010s and 2020s. The strength of the country's currency, the Swiss franc, is a major contributor to this trend.

"As a safe-haven currency, the Swiss franc tends to appreciate when there is stress on world markets," said Charlotte de Montpellier, a senior economist covering France and Switzerland at ING.

"This systematically pushes down the price of imported products. Switzerland is a small, open economy, and imports account for a large proportion of CPI [consumer price index] inflation," Montpellier told CNBC ahead of the central bank's announcement.

Amid high levels of global economic uncertainty, the franc has continuously strengthened in recent months and is widely expected to continue on this path, suggesting ongoing challenges for the SNB.

As the strength of the franc has been the primary driver of Switzerland's low inflation, the SNB is now taking steps to constrain the currency's rally by keeping rates "systematically lower than elsewhere," Montpellier said.

Negative rates?

Adrian Prettejohn, Europe economist at Capital Economics, told CNBC ahead of Thursday's interest rate decision that he expects rates to be cut to -0.25% this year, but noted that the SNB could go even lower.

"There are risks that the SNB will go further in the future if inflationary pressures don't start to increase, and the lowest the policy rate could go is -0.75%, the rate it reached in the 2010s," he told CNBC.

Prettejohn said interest cuts weigh on currencies, making borrowing cheaper and encouraging investment.

However, there are also some concerns and risks attached to negative rates, including for savers, who could see any profit on their savings wiped out, and for banks, which will rake in lower returns on their loans.

ING's de Montpellier noted that eventually, negative rates might "distort financial markets, compress bank margins, and raise concerns about long-term financial stability."

Source: CNBC

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Gerik

Economic

Surging Bond Maturities and Sectoral Vulnerability

According to Vietnam’s Investment Credit Rating Agency (VIS), a total of 474 corporate bond lots valued at VND 150 trillion are scheduled for maturity in the latter half of 2025. More than 50% of this figure—approximately VND 79.8 trillion—is attributed to the real estate sector, making it the most exposed to rollover risks. The property industry is already facing growing challenges in liquidity, declining collateral values, and weakened creditworthiness, leading to increased default probability.

Notably, 26 bond lots worth VND 19 trillion issued by 15 property developers are now under first-time delay warnings. This development signals broader strain across the sector, with many firms confronting mounting cash flow obstacles and asset devaluation, resulting in impaired ability to service debt. The cumulative picture shows that credit risk is not only persisting but gradually spreading. This is evidenced by the fact that 148 bond lots worth VND 25.8 trillion have already entered a state of delayed repayment, highlighting a fragile credit environment that continues to deteriorate.

Contrasting Trends in Primary Market Activity

Despite the looming maturity burden, Vietnam’s primary bond market has witnessed a sharp recovery in new issuances. In May 2025 alone, private placements reached VND 66 trillion, up 35% from April. Over the first five months of the year, total issuance amounted to VND 137 trillion, marking a 79% surge compared to the same period in 2024. This rebound has been driven largely by commercial banks, which accounted for approximately VND 100 trillion in new bonds—an increase of 193% year-on-year.

Banks have shown a clear preference for issuing standard (non-convertible, unsecured) bonds with 2–3 year maturities and interest rates ranging from 5.1% to 6.0% annually. Major issuance plans for 2025 include MB Bank’s VND 30 trillion target and ACB’s VND 20 trillion target. Meanwhile, property developer Nam Long (NLG) plans to raise VND 660 billion via asset-backed, non-convertible bonds with a 3-year term and a high coupon rate of 11% for the first two periods—underscoring the premium that real estate firms now must offer to attract capital amid investor caution.

Regulatory Tightening and Risk Mitigation Efforts

Amid these market pressures, Vietnam’s National Assembly has approved amendments to the Enterprise Law in a bid to strengthen market integrity. A key provision now restricts non-public companies from issuing private bonds if their total liabilities exceed five times their equity. This condition aims to curtail reckless borrowing and enhance transparency in bond offerings. The reform is particularly timely as the bond market grapples with potential systemic risks triggered by real estate-linked defaults.

The new regulation is also expected to promote better financial discipline among issuers, improving the risk-reward balance for investors. In this context, the banking sector is likely to remain the dominant source of issuance in the coming months, as their balance sheets and compliance profiles are comparatively stronger. VIS projects that the total bond issuance by banks in the second half of 2025 could reach VND 200 trillion, reinforcing their leadership in capital market mobilization while potentially easing the strain on credit expansion limits amid rising loan-to-deposit ratios.

Shifting Advantage Toward Financial Institutions

This dynamic has led to a situation where the balance of power in the bond market appears to be shifting from high-risk sectors like real estate toward better-capitalized financial institutions. While property developers continue to face investor skepticism and high borrowing costs, banks are able to raise funds more efficiently and at lower rates. This evolving trend may create uneven liquidity access across industries, further widening the gap between creditworthy and vulnerable borrowers.

Vietnam’s corporate bond market in the second half of 2025 is poised at a critical juncture. The maturity wall of over VND 150 trillion—dominated by real estate debt—presents a formidable test of market resilience. While the recovery in new bond issuance and policy reforms offer a stabilizing counterbalance, the underlying risks remain heavily concentrated. The success of these regulatory and market responses will hinge on investor confidence, issuer discipline, and the continued flow of institutional capital—particularly from the banking sector. As liquidity tightens and credit quality becomes more polarized, the real estate sector may remain under pressure, serving as both a litmus test and a potential fault line for Vietnam’s financial stability.

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Gerik

Economic

Declining Consumer Enthusiasm Despite Extended Campaigns

The 618 shopping festival, once a highly anticipated e-commerce event in China, concluded in 2025 with notably less consumer excitement than in previous years. Initially established by JD.com to mark its founding on June 18, the event has evolved into a multi-platform, multi-week retail campaign. This year, presales launched as early as May 13 across JD.com and Alibaba platforms, turning the event into a month-long effort to boost spending. Yet, the extension appears to have diluted its appeal, transforming what was once a focused surge of consumer activity into a more routine affair.

This shift in consumer sentiment reflects a broader evolution in shopping behavior. Many shoppers now view discounts as omnipresent, not exclusive to promotional periods. The quote from a Beijing-based consumer, who noted no need to shop specifically during 618 because comparable discounts are always available, illustrates how year-round promotions may be cannibalizing interest in concentrated shopping events.

Macroeconomic Conditions Weigh on Spending Confidence

The tepid response to 618 is intertwined with deeper concerns in China’s macroeconomic environment. Ongoing uncertainty in employment stability, a sluggish property market, and stagnant wage growth have created a climate of financial conservatism among consumers. This broader context has diminished the marginal impact of promotional campaigns, no matter how aggressive the discounts.

Rather than spurring new demand, these extended sales periods appear to be shifting the timing of already planned purchases. Retailers and policymakers hoped that lengthening the campaign window and applying subsidies might reverse weak consumption patterns. However, as Rachel Lee from Worldpanel China points out, when consumer budgets are constrained, discount-driven strategies are less effective, and shoppers tend to prioritize affordability and necessity over promotional hype.

Sales Volume and Brand Performance: Mixed Signals

While e-commerce platforms have not published total sales figures for 2025, some indicators provide insight. JD.com reported over 2.2 billion orders across its platforms, more than doubling the user participation rate compared to the previous year. Alibaba noted that 453 brands crossed the 100 million yuan threshold in gross merchandise volume (GMV), with top performers like Apple, Huawei, L’Oréal, and Lululemon surpassing 1 billion yuan.

However, these figures must be contextualized. Last year, total 618 sales fell by 7% to 742.8 billion yuan, according to Syntun, marking the first decline in the festival’s history. While individual brands may continue to perform well, the broader environment suggests a flattening trend in overall festival growth.

Policy Support and Subsidy-Driven Consumption

One notable bright spot has been the partial recovery of retail activity in May, when sales exceeded expectations with a 6.4% year-on-year increase, the highest since December 2023. Analysts partially attribute this to the early start of the 618 event and the government's consumer subsidy programs. These initiatives focused on incentivizing purchases of high-ticket items such as home appliances and smartphones.

Jacob Cooke from WPIC noted that the prolonged festival helped smooth consumer demand throughout the month, supporting a steadier sales pattern instead of a sudden spike. Yet, the effectiveness of this strategy may be short-lived. HSBC analysts warned that regional pauses in subsidies—due to depleted central government allocations—could drag down both 618 outcomes and broader June retail performance. If fiscal support is not renewed promptly in July, retailers may struggle to maintain momentum.

A Shift from Stockpiling to Selective Consumption

The overall picture suggests a fundamental change in how Chinese consumers engage with large-scale promotions. Shoppers are becoming more selective, focusing on necessities rather than impulse-driven bulk buying. This shift is evident in the testimony of consumers like Eve Wang, who once enthusiastically participated in shopping festivals but now refrains from unnecessary purchases.

This behavioral trend indicates a reduced psychological pull of major sales events, particularly as economic prudence becomes ingrained in household decision-making. The declining reliance on promotional calendars reflects a long-term transformation in consumption culture, signaling challenges ahead for e-commerce platforms hoping to use events like 618 to drive predictable spikes in sales.

The 2025 edition of China’s 618 shopping festival underscores a clear disconnect between retail marketing strategies and the evolving realities of consumer behavior. While headline figures from leading platforms may still impress, the deeper trend suggests that prolonged campaigns and discounts are becoming less effective in igniting widespread enthusiasm. As household financial caution deepens and government stimulus efforts fluctuate, China's retail ecosystem may need to rethink how it engages a more measured, value-driven consumer base.

Source: Reuters

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Gerik

Economic

Heightened Economic Uncertainty and Structural Risks

In its 2025 Financial Stability Report, the Swiss National Bank (SNB) emphasizes that the global economic and financial environment remains deeply uncertain. This uncertainty is closely associated with increasing trade frictions and geopolitical instability. While the report does not suggest immediate turbulence, it underscores that the prevailing global context creates a fertile ground for adverse developments that could escalate in scale and impact.

One major structural factor contributing to this uncertainty is the surge in global public debt, which has reached levels close to historical records. At the same time, asset prices across multiple markets—including residential real estate worldwide, global corporate bonds, and the U.S. equity market—remain elevated. These conditions suggest that financial markets are vulnerable to external shocks, and the probability of price corrections cannot be ignored. While these trends do not necessarily signal an imminent downturn, their simultaneous presence tends to reinforce the sensitivity of financial systems to external triggers.

Stress Testing Assumptions Reflect Fragile Global Landscape

In response to these evolving risks, the SNB reported adjustments to the design of its stress test models. These are now calibrated to simulate highly adverse scenarios that may be improbable but are plausible enough to warrant preparation. This approach reflects an implicit recognition that global financial conditions are increasingly shaped by low-probability, high-impact events. Although the report stops short of predicting a specific financial crisis, its forward-looking measures suggest an expectation that severe downside scenarios, if realized, could be amplified by the current macro-financial fragility.

Despite the broader economic risks, Swiss banks have demonstrated improved financial performance over the past year. The SNB noted that profitability across the sector rose in 2024, with UBS playing a dominant role in this rebound. This improvement was achieved without compromising financial buffers. Capital ratios remained steady, and banks continued to maintain strong liquidity reserves, which ensured their operational flexibility in times of stress.

Importantly, the sector’s capital buffers were assessed as having robust loss-absorbing capacity. This means that even under adverse macroeconomic developments, Swiss banks would likely retain the ability to maintain core lending functions. The SNB's positive assessment of Swiss banks' internal health contrasts with its more guarded tone on global market stability, suggesting a disconnect between domestic resilience and external vulnerability.

Interplay Between Global Pressures and Domestic Preparedness

The analysis in the SNB report highlights how external financial and political pressures interact with national banking systems. While the Swiss financial sector appears stable for now, this outcome cannot be entirely disentangled from global trends. For example, the combination of high public debt and inflated asset valuations increases the likelihood of sharp corrections abroad, which could in turn influence capital flows, interest rates, and investor sentiment in Switzerland. Though not a direct trigger, these international developments are capable of shaping the risk environment within which Swiss banks operate.

By reinforcing stress test models and maintaining regulatory vigilance, the SNB demonstrates its intent to shield the domestic financial system from such potential spillovers. However, the degree to which this domestic buffer can absorb prolonged or systemic global shocks remains an open question.

The 2025 Financial Stability Report underscores a cautious yet proactive stance by the Swiss National Bank. It acknowledges that while Swiss banks are currently in a strong position, this strength must be preserved through continued awareness of and response to global economic dynamics. The coexistence of domestic financial stability and global uncertainty suggests that while Switzerland may be insulated for now, it is not immune to risks originating beyond its borders.